Back in 2009 Silicon Valley entrepreneur Eric Ries (@ericries) had coined the term “pivot” for the technique used by tech startups to change the strategic direction of their companies based on what they had learned (see his original post here). The theory goes that by doing you are actually learning something along the way (see my previous post on learning from feedback loops in systems thinking) and that you might find the “something” that you had learned has a better chance of success than your original strategy. The alternative is that at least it will enable you to extend your organization’s runway further out into the future in search of success.
With the dry weather this summer my backyard oak trees seem to have made a premature determination that fall has already arrived. How do I know this? By the amazing proliferation of acorns throughout my yard before August had even arrived. As fast as the acorns could fall the family of gray squirrels was scampering across my yard burying their new found bounty. Although food was abundant the squirrels were making the effort to bury these acorns for their future survival. While snow may come relatively early in Minnesota it wasn’t likely to start falling for at least three months but the squirrels weren’t waiting for even a moment to begin their work.
In early 2007 I was planning to launch my first Failure Forum. The forums were a series of presentations (modeled after TED talks) with an ensuing discussion that were meant to examine internal innovation projects that had been shut down. We sought to understand what had been accomplished with the project, what had we learned from it, and what would we do differently next time. The truth was that many of the innovation projects were modeled after previous work.
In an NY Times Op-Ed article yesterday, neurosurgeon and journalist Sanjay Gupta (@sanjayguptaCNN) cited a recent anonymous survey where orthopedic surgeons said “24 percent of the tests they ordered were medically unnecessary.” The suggestion was that the surgeons were performing the unnecessary tests as a form of “defensive medicine” that is meant less to help the patient than to protect the doctor and hospital from lawsuits. Why has it come to this? How has society come to expect “zero defects” from the medical industry?
As a fan of every opportunity to better understand failure and the powerful role it can play in our lives a friend recently sent me the recording of Dessa Darling’s (a.k.a. Margret Wander) 2012 commencement address to the College of Liberal Arts at the University of Minnesota. Dessa earned her degree in Philosophy from the school and is a member of the indie hip hop collective Doomtree, proving that you can actually make money with a Philosophy degree. An interesting side note on Doomtree is that they truly a collective of seven members who come together to make both music and money with no contract. If a member chooses to leave the band they are free to leave with no strings attached and they will be replaced with a new member. Even before forming they seemed to understand that most bands don’t survive when one person leaves and contracts need to be unwound so they created a more fungible organization that will survive and potentially flourish with artists coming and going. This is a great example of creating a structure or process that supports a more natural state of the world.
Remembering back to my years in the financial industry (Morgan Stanley 1997-2003) every business unit was always looking for the “multiplier” that can have a significant impact on their business. In the failed Mortgage Bond business it was the leverage multiplier – borrow huge sums of money to invest in mortgages with the goal of “super sizing” your returns. It the Private Equity business it was the pricing multiplier that you were seeking when you were able to roll smaller companies into one larger company by shedding redundancies (i.e. layoffs) and less pricing pressure from less competition. One of my other lessons on the importance of the multiplier came within my first few weeks of joining the Firm’s MBA New Hire Training Program. The teacher was one of the Firm’s legendary Global Markets Strategists, Barton Biggs.
Where have all of the General Managers gone? HBR has recently run a couple of articles on this topic (Bring Back the General Manager – 7/10) and I couldn’t agree more with the findings. With the constant pressure to demonstrate quarterly profits and to find dollars to invest in growth opportunities, organizations have been trying to be as lean as possible. They are seeking to garner every efficiency that they can out of the system. One way corporations have done this is by merging smaller businesses into larger business groups and cutting out any redundancies with the new organization. The elimination of the general manager position in particular is not just due to the recent economic downturn but has been going on the better part of the last decade. After a few iterations of narrowing the food chain, an organization can be quickly left with too few good leaders who are equipped and able to lead a team of cross-functional business directors. These “Leaders” might have functional expertise in their discipline but they are lost when it comes to setting a vision and strategy their broader business.
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